How did you go about achieving that?
By mutual due diligence. It’s a process that starts by looking at what kind of assets they have, what’s the track record in managing those assets and what’s the outlook for the coming years — what kind of cash flow can they generate, what value potential do they have? How robust are the projects they have in the pipeline? What are they going to contribute to shareholders in the coming years? What kind of systems do they have in support of recording and reporting?
The beauty here is that our businesses were very comparable. We’re active in the same market segments and know each other’s assets pretty well. In France we shared ownership of four assets, and so in looking at the key parameters in a deal — earnings per share and net asset value — we quickly reached the comfort level we needed.
How has the integration progressed?
It’s going well. We announced in early September the top 50 positions in the group. A month later we announced the entire organisation. So everybody — and we have about 1,500 staff — knows his or her place in the organisation. We’ve agreed on the key processes that we need to run the company, including how we decide on things, how to communicate with the supervisory board and how to run the business plan.
Given the current situation in the property sector, do you expect the five-year plan you’re working on to include significant upheavals such as disposals?
We get a lot of questions on divestments and, if we have something to say, we will give some indication when we publish our annual accounts in February 2008.
Even before the events of the last couple of months — the subprime crisis and real estate being a bit in the doldrums — we [had] a focus on cash flow. The absolute value of real estate is less important to us than the cash flow it can generate. Particularly on the shopping-centre side, our assets are there to stay because there’s always a way we can make more money out of them: reinvent them, extend them, change the tenant mix or attract more visitors and improve the cash flow on a continued basis.
The yield game you see others playing, gearing companies to 90% and hoping that the value of real estate will increase so they can make a few bucks out of it, is not the game we’re in. If you look at our long-term value, the two companies were both very conservatively geared. We have 26% loan-to-value, which is very low. I’d say it’s a pretty luxurious position to be in, particularly when the cost of borrowing is going up. We don’t have any problems at the moment in borrowing. We have big lines of credit still open, so that’s not keeping us awake at night.